Saturday, February 18, 2012

2/18/12 And it's going to be a long, long time



First thrusts (ie, sharp rallies off major lows).

We have that working in our favor right now:

(a) Sharp rally off the October 4 low.
(b) Even better, instead of the 'slight correction' that Landry usually sees, we got a -10% correction in November that probably wiped out most of the new bulls.
(c) If that didn't do it, the bulls got hosed again in December.
(d) In fact, I would argue that it wasn't until mid-January that conservative trend-followers (ie, those who don't bother trading trend transitions) finally got a buy signal to go long. So we could have a long ways to go.

Zoom out two years, and it's obvious we've just broken out to new highs. I believe both market participants (the psychological bent here, if you will) and 'vested interests' want the indexes much higher. Now that we're in the launch zone, they will do all they can to ensure a successful takeoff/flight.
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83 comments:

  1. Clear CutFebruary 18, 2012 at 10:43 AM

    (d) is exactly how it was. No doubt about it.
    I was still worried about the over head supply (remember that?) and waiting for the MA's to cross.
    Then Jesse started showing us early transitional patterns (Dang a $4.85) and TOF came up with some really nice charts of the same patterns, and we were off to the races.
    Trend following requires a trend to follow, so it may be a hair late but it will also keep you on the right side of the trend and supports confidence, which is easily over 90% of trading.
    As Yogi said: "Baseball is 90% mental -- the other half is physical."

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  2. Telestar3dFebruary 18, 2012 at 11:09 AM

    I have been reading "Market Mind Games" which explains that we need to use our feelings for trading. I was not going to post until after reading the entire book, but changed my mind due to the long holiday. I think 2nd would totally dig the book as well as others on the blog.

    Here is a lecture by Denise Shull, "The Brain on Risk." It is about an hour and well worth one's time on this long weekend.

    http://accordent.powerstream.net/008/00102/090310dsa/msh.html

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  3. Clear CutFebruary 18, 2012 at 12:24 PM

    TD3, the thing I like about Landry's system is it is designed to overcome some of the psychological issues with a somewhat mechanical approach that off sets or reduces them. Once you deal with the risk psychology then it becomes much easier. We know there is risk and there will be losers. If we limit risk and maximize opportunities for out performance by stacking the short term in our favor, then we can keep a longer term horizon where the extended benefits overcome the few that don't work.
    I forget who, but Landry utilized a psychologist as well. Yogi was right!

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  4. DavidFebruary 18, 2012 at 2:50 PM

    Jesse -- I think it is very natural for smart traders to become uneasy after a 2 months rally that was preceded by a "horror case." I recall how quickly both 2nd_ave and I gave up on the stock rally off the 2009 lows. This does not mean, however, that the rally is over...

    Let's look at it this way: the "smart money" was obviously buying stocks in September/October/November. Then, they were rewarded with a nice continuous 2-month rally starting mid-December. At this point, they still see a lot of *potential* risks on the horizon, and so it is very natural for them to protect their large gains by buying put options. So from this point on, the "smart money" is probably not going to be buying stocks any longer, but it is the J6P and the trend followers who will take over and who will push the market to new multi-year highs. This second category was out of the game for many months now and is just starting to come back, and a large market drop can only occur AFTER all of them have fully committed their funds to the market, which is a slow multi-month process.

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  5. 2nd_aveFebruary 18, 2012 at 3:53 PM

    David- I might add that for every put buyer there is a seller. As we all know, most options (calls or puts) expire worthless. So it would be unusual for 'smart money' to be buying puts as a means of generating income- as you point out, the intent here is to 'protect gains,' or hedge positions. And of course, if they're truly bearish, they would just sell stocks outright.

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  6. JesseFebruary 18, 2012 at 4:29 PM

    Well, Carnival here is certainly nothing like Brazil lol. Tons of water baloons and "silly spray" instead of drunken T+A. More of a celebration for kids vs. other parts of S.America.

    Lots of excellent analysis and reasoning from the board why the bull will continue. It took me a long time, but I've learned over the years to only look at the indicators and the charts and completely (try to) disregard my feelings, others beliefs, and any type of rationale coming from pundits, CNBC, or anybody else who has an opinion. The market will definitely go higher and we will all continue to make boat loads of money in the market this year.

    To show that there's some method to my utter madness, 2 weeks ago, I posted here that the market was getting frothy, but we were safe and needed to see various indicators hit extremes before a selloff. In the past, when all of the indicators lined up at once, the market sold off quite dramatically w/in a week or two. I said that I would monitor these indicators closely and periodically give you guys an update.


    Specifically, I was looking for:
    -A Vix reading near 15
    -Daily Put/Call ratio close below .57.
    -10 day put call ratio at .75
    -20 day put call ratio between .76 and .82
    -AAPL rsi of 82
    -VXN at 16
    -1000 point spread between the Dow and its 34wma

    So here's what we are looking at now:
    -VIX hit 16.10
    -Daily put/call ratio closed at .70, .71, and .75 yesterday. These could be a little lower.
    -10 day put/call double bottomed at .82 and .83 (better if a tad lower)
    -20 day put/call of .90
    -AAPL- well, its rsi literally broke all records for a mega cap.
    -VXN traded at 17 and change.
    -The Dow spread is currently about 900 points.

    Since 2002, the Dow has been extended 700-1000 points above its 34 wma on 9 occasions.

    2004- 700 point 1 month decline.
    2006- 850 point 2 month decline.
    2007- 750 point 1 month decline.
    2007- 1500 point 1 month decline.
    2010- 700 point 1 month decline.
    2010- 1550 point 6 week decline.
    2011- 850 point 1 month decline.
    2011- 2300 point 2 month decline.

    I posted a carbon copy of the above (Dow Figures) on two occasions last year when the Dow got similarly stretched.

    Having said all that, this time may be slightly different. The 13 week crossed up through the 34 week in December triggering my ultra, mega-bullish stance. Now, I would argue that since the crossover is so "fresh", the bull is just getting started. In the past, after a "fresh" crossover, when the Dow gets this stretched, it trades down to the 13wma which provides mega support.

    So, as of now, I'm mega-bullish and a big buyer (assuming proper setups) at DOW 12,456.57......

    and if I'm wrong, with a HARD stop at 12,456.56:)

    I'm wildly bullish. Just at lower prices lol.

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    1. JesseFebruary 18, 2012 at 4:46 PM

      Sorry, the 9th instance was also in 2007 which was a 6 week 1400 point drop.

      There's a good chance that I'll be stopped out of TVIX at Tuesday's open after 2nd's 250 point gap up (we have to ring the bell at 13,000 right?), but there's also a good chance that something could happen over the next 5-10 trading sessions. Best case is we trade flat to slightly lower over the next 4-6 weeks waiting for the 13wma to catch up before resuming the march higher.

      Delete
  7. 2nd_aveFebruary 18, 2012 at 4:33 PM

    All of us have traded the long side since the March '09 lows. But we be the exceptions, bro! How do I know that? I wouldn't have believed it myself, but according to Kass 'Since the beginning of 2007 (through 2011), retail investors liquidated over $450 billion of domestic equity funds, accumulated $130 billion of international stock mutual funds and purchased $930 billion of bond funds. The near-$1.4-trillion swing out of domestic equity mutual funds and into bond mutual funds is unprecedented.'

    If that's true, then the average retail investor has not even begun to recoup losses taken in 2008-09. He's done relatively well in bond funds (+7% annually, maybe), but hey- the SPX is up over +100%. Bernanke just screwed them again with an extension of low rates, and with the SPX at 2-year highs, these investors are probably in the mood to switch back into stocks.

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  8. Telestar3dFebruary 18, 2012 at 4:42 PM

    CC, I like many things about the Landry system, though most of what I know about it has been gleaned from your conversation's with 2nd over the last few years. His system has always made sense to my way of thinking and will work during a trending mkt. One just has to have the patience to wait during a non-trending mkt or upon recognizing a non-trending mkt switch gears to a method that works in an oscillating environment.

    I have looked at Jesse's chart's and did not make a comment to him so as not to introduce any bias to his perception of the mkt for his trade.

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    1. JesseFebruary 18, 2012 at 4:55 PM

      Thanks for taking it easy on me T3:) The last thing I need is more stress and second guessing over the long weekend:) I should know by pre-market on Tuesday if the trade is going to work. If not, maybe I can eke out a few pennies in DANG before the steamroller arrives lol.

      Delete
    2. Clear CutFebruary 18, 2012 at 8:28 PM

      Yep, I printed money at the beginning of last year and then only threw on a trade or two the rest of the year. T's would have been the place to be when the TLT was at it's usual bottom of $87 or so. The ride to 121 would have been nice while the trend went sideways.

      I'm learning....

      Delete
  9. 2nd_aveFebruary 18, 2012 at 4:52 PM

    jesse- You're right- it was your wildly bullish call last December, followed by unreal rallies in the exact names that you pointed out were about to spike out of long bases, that got my attention. There's got to be more to than a +10% move?

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    1. JesseFebruary 18, 2012 at 4:57 PM

      Hell ya 2nd! As I pointed out in my forecast, I'm thinking 30-40% this year. Perhaps the best trading ops in our careers going forward.

      Delete
    2. JesseFebruary 18, 2012 at 4:59 PM

      After 13/34 week crossovers, on top of all the other things I discussed in the forecast, a TON of $ can be made in a VERY short period of time on the short side in crazy bull markets like these. Conversely, a shit-TON of money can be made over a longer duration during these markets.

      Delete
    3. Telestar3dFebruary 18, 2012 at 5:10 PM

      Ton of $ on the short side is very real.

      That said, I will never forget March 2000. In about 12 trading days, I had three multi-millionaire fiends almost completely wiped out because they refused to sell their longs after years of straight up gains. They were all like deer in a headlight, frozen.

      Delete
  10. Telestar3dFebruary 18, 2012 at 5:02 PM

    The question could be, how many portfolio mgr's, hedge funds and retail investors missed most of the move and what pressure will be on the professional's to play catch-up prior to end of Q1?

    That said, I would really prefer a pullback here, but the system is being flooded with liquidity which is a driver.

    The fat tail out their is if the Greek bonds are considered a default, than the CDS's have to be paid out and the insuring side does not have the funds to meet the obligations. The mkt does not seem to think that this will happen. But it is a major risk out there.

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  11. 2nd_aveFebruary 18, 2012 at 5:11 PM

    t3d- I can imagine some farmer in Arkansas who gets up at 4 am every morning to milk the cows and feed the pigs, then spends a minute over coffee to listen to Landry. He's been out of the market since last May. After Landry, he clicks on a simple chart of the SPX. Last week he finished his daily 15-second review of the chart and turned to his wife, 'Maggie, I want you to call Joe this week and have him put us back in stocks.' Then back to the barn.

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  12. Telestar3dFebruary 18, 2012 at 5:21 PM

    Yeah, 2nd, I can see that happen and it would sure be a better bet than the people who bought those $930 billion of bonds. But one must acknowledge that the best performing index/etf for 2011 was the TLT up 28%. Any thinking person has to understand that our bond mkt ultimately sets up like some countries in Europe with spiking rates, and 2nd you are absolutely right that the powers to be will do everything in their power to stop that. They will only fail at the end game due to the unsustainablilty of debt to infinity.

    This could be closer than we think as in years and not our children's children.

    As Dylan say's, the times they are a changin

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  13. 2nd_aveFebruary 18, 2012 at 5:39 PM

    t3d- Exactly. How many people do you know who would have placed bets on TLT last year? And how many of them would have stayed with the position for the entire +28%?

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    1. Clear CutFebruary 18, 2012 at 8:25 PM

      I have to say I advised my brother, who is in a standard retirement account through his work to put his port in bonds. He did very well last year and I had in in bonds well before 2011.
      His account went up a lot more than 28%. For some reason I'm better with OPM.

      Now I'm going to suggest he diversify more into stocks. The problem for these accounts will be when T yields rise which may put the hurt on stocks AND bonds (bonds until rates rise enough to make sense) and there is no place to turn except a MM account.

      For us it will be the short bond trade which I will put a lot into and just keep moving the stop while I go do something fun. At the top of that move I'll go as longggggg as possible on bonds at the highest yield I can find.
      Sooner or later stock returns will drive all that 2% money out of T's and bonds.

      Even Suze Orman is telling people to get into div payers and get out of bonds and T's.

      Delete
  14. MarkWFebruary 18, 2012 at 6:36 PM

    Man, I have know idea how the hell I got invited into this club.

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  15. MarkWFebruary 18, 2012 at 6:59 PM

    TOF- AVAV is setting up here.

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  16. AnonymousFebruary 18, 2012 at 8:42 PM

    Mark - I really like AVAV at this price. Higher lows with an easy stop out about $1.5 below the current price. A small price to pay for a lot of potential upside.

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  17. AnonymousFebruary 18, 2012 at 8:56 PM

    T3d - I love this slide on your link:

    "The more educated people are, in my experience, the less likely they believe they have resources they are not aware of..."

    I believe this is a major factor in preventing really smart people from making money in the markets. Like Laz says, the short argument is always more articulate and reasonable: the smart people amongst us were very articulate in explaining how bad the economy was and how we were screwed. They put together these amazing charts and graphs about the unemployment statistics, government statistics on population changes and how they were not being correctly incorporated into unemployment statistics, impacts these changes have had or should have on retail sales and GDP, etc etc etc. They shorted the market with reckless abandon because they knew they were right and it was only a matter of time before things got really bad.

    Yet what they failed to realize was it was much simpler: There is very little correlation between GDP growth and stock market gains. Its all about earnings.

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  18. AnonymousFebruary 18, 2012 at 9:27 PM

    t3d - thanks for posting that link. it's ironic because my wife, who by the way is a marriage and family therapist, and were talking about the game plan i had with my self employment and the conversation turned to how it seems we have made more money investing than anything else...we then had a conversation about the correlation between investing and emotions and her comment to me was she thinks the two reasons why i have had some success with the markets is because of two characteristics that I have (she calls them flaws, but i beg to differ):

    (1) i am an unemotional person (clearly not good for her wanting me to express my feelings, but definitely desirable when it comes to limiting losses or having conviction in the face of adversity)

    (2) i have an innate ability to focus on only one thing and completely ignore everything else (also clearly not good for her when she wants me to do multiple errands).

    that fits in well with the link you posted.

    i told my wife that a third and possibly more important characteristic is understanding the psychology of other traders.

    back to #1 above:
    after you have a great trade / week / month, how often have you had the urge to share your success with someone else? if trading/investing is all about channeling your emotions then shouldn't we resist the urge to share our success? the longer i do this the more i realize that just as easy as it was to make money, it's even easier to lose that money. learning to resist the urge to brag about your winners goes a long way to becoming an unemotional investor / trader

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  19. Telestar3dFebruary 18, 2012 at 10:02 PM

    TOF, I also consider myself an unemotional trader and try to accept both losses and winners with the exact same emotion. Of course though winning is more fun and less stressful. About half way through Shull's book and I'm going to try and incorprate some of what she says and monitor the results.

    TOF said, "i told my wife that a third and possibly more important characteristic is understanding the psychology of other traders." Actually as I was reading Shull, I thought about you and my thought was that you indeed have an innate ability to do this on most of your trades, I just did not want to say so. However since you stated it first, I agree completely. It is also something I want to try and work on as I think it to be important.

    I'm glad you enjoyed the link and its nice that you have an in-house therapist.

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  20. AnonymousFebruary 18, 2012 at 10:47 PM

    T3d - There are so many other things of course. Really number one, two, and three in no order:
    *Identify a hot sector / story
    *Identify a potential catalyst
    *Identify a low risk entry point

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    1. Telestar3dFebruary 18, 2012 at 11:30 PM

      For sure TOF, its just one more arrow for one's quiver.

      Delete
  21. AnonymousFebruary 18, 2012 at 11:03 PM

    BB - Update on GRVY:

    http://ro2.gnjoy.com/intro.asp

    ReplyDelete
  22. Telestar3dFebruary 18, 2012 at 11:35 PM

    Lucky you do not live in Hawaii.

    honolulu's inflation rate is rising faster than the national average, which means island residents are paying more for just about everything.

    The consumer price index in Honolulu for 2011, the measure of change in price for goods and services, rose 4 per cent over 2010.

    The national average was 3 per cent.

    Food prices rose by 4.7 per cent in 2011 while electricity went up 34.3 per cent. Gas is up 19 per cent.


    KWh of electricity is .34 in Honolulu

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    1. AnonymousFebruary 19, 2012 at 8:20 AM

      Interesting...no wonder kaimu rants incessantly about govt spending.

      Delete
  23. MarkWFebruary 19, 2012 at 7:55 AM

    Keeping trading gains quite...That's kinda interesting. You are the only guys who have any idea what/how I'm doing. Patricia doesn't even know/care. It's kinda funny. I cash a $100K ticket and nothing really 'happens'. Having said that, I am an fairly emotional and can 'feel' the 'stress' of a trade...if those are the right words. I'm not so sure.

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  24. MarkWFebruary 19, 2012 at 8:26 AM

    We already have a commercial grade treadmill, but to set up one half of my garage into what I would describe as a functional gym would cost about $7,500.

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    1. AnonymousFebruary 19, 2012 at 9:01 AM

      i dont get it. so buy nls?

      Delete
    2. 2nd_aveFebruary 19, 2012 at 4:08 PM

      I think it's the MITK gains burning a hole in his pocket, tof.

      Delete
  25. BB CanadaFebruary 19, 2012 at 10:51 AM

    The other big reason we are going to see a solid bull market is because the really big money, meaning the pensions plans, etc. have been moving out of equities over the last 10 years and are now at a very low percentage relative to their usual holdings. Many are underfunded and are counting on 7% returns to make their pension payouts - there is no way to make 7% in bonds, so will have to move into equities.

    Here is one article from the UK, but there are many more if you search:

    Over the last 10 years there has been a significant shift by UK pension funds away from equities into bonds and Index-Linked. New research from BNY Mellon shows that the total percentage held in global equities has swung from 73.5% to 51.4% in the last decade (2000/2010), with asset allocations to UK equities falling even further, from 51.0% to 23.7% over the same period.

    http://www.pensionsworld.co.uk/pw/article/uk-pension-funds-slash-equity-holdings-12310041

    Plus, you now have the guys who build pension models (like Don Coxe at BMO) increasing the equity weightings of the recommended asset allocations which will drive more purchases.

    These pension funds move slowly, and in many ways are trend followers of the broad long term trends. They were are record equity allocations in 1999 and now are at longterm low equity allocations (they were much lower in the 40's and 50's). Now that they see the market moving solidly upwards, they will feel more comfortable about buying this market and pushing prices up even further.

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  26. 2nd_aveFebruary 19, 2012 at 11:00 AM

    fwiw, I can't say I'm unemotional. The best way to put it is I'm fairly emotional, but able to act independently of my emotions.

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  27. 2nd_aveFebruary 19, 2012 at 11:04 AM

    Mark- To be honest, I don't get the monetary investments in home gyms and/or gym memberships. All I do is take (pleasant) walks, and do a few pushups when I think about it. No injuries, no joint problems.

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  28. 2nd_aveFebruary 19, 2012 at 11:07 AM

    Let's go back to the idea that most market gains are concentrated in a few trading days of the calendar year. Then extrapolate that out to a multi-year time frame. Is it possible we 'average' +7% a year for the next 5 years, but manage a +30% return this year? Sure. We might go down -10% next year, for instance. There are many ways to arrive at an average.

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    1. BB CanadaFebruary 19, 2012 at 11:34 AM

      I'd say we are likely to outperform the longterm market average over the next 5 years given how poor the 12 have been and current valuations.

      Having 2 or 3 20%+ years in a row would not be out of the ordinary in my opinion.

      Delete
  29. ChickenpookieFebruary 19, 2012 at 4:28 PM

    Reading the WIR, I see this and think to myself that I never believed the sky was falling, but it did fall, square on GDX and GDXJ:

    "Those of you who believed the sky was going to fall may have stayed in cash or gone to defensive holdings in Telecom and Utilities. Many would have sought “safe haven” in the Goldminers (GDX -10.9% over 6 mo.) and Junior Goldminers (GDXJ -22.5% over 6 mo.). Big mistake."

    "But now I have cut my Junior Gold portfolio stocks by about 1/3 and am watching the smaller basket like a hawk. Half of my holdings are available for sale on any day now."

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  30. ChickenpookieFebruary 19, 2012 at 4:36 PM

    It's obvious this guy is not only out of reach, he's out of touch as well:

    "For years I have joked about the copper penny. Today I discovered the US penny is 97% zinc. The zinc price btw is on the upswing I have read."

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  31. ChickenpookieFebruary 19, 2012 at 4:40 PM

    So which is it, is he buying, selling, or culling junior miners?

    "Given the Fed policy to keep interest rates at current levels for the next couple years, and their inclination to QE, I will keep buying the junior miners, mine developers and explorers, with diversification between various precious metals, and some copper, iron ore and other metals."

    ReplyDelete
  32. MarkWFebruary 19, 2012 at 4:45 PM

    OK, did the more reasonable thing...I bought Kendra a real Mt. Bike. It's an adult small frame, so unless she get's really tall, this should be the last bike I have to buy for her. The ROI?? A 17 mile ride today with just her and the old man...How great is that!

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  33. MarkWFebruary 19, 2012 at 4:50 PM

    CP- Seems like the same old same old.

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  34. ChickenpookieFebruary 19, 2012 at 5:31 PM

    Yeah, a rolling stone gathers no moss it seems, LOL! Just pay the nonsense no mind...

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  35. ChickenpookieFebruary 19, 2012 at 5:49 PM

    gold:copper - Seems to be turning back up, might be a warning everything's not kosher in Denmark....

    Hopefully it turns back down.

    http://stockcharts.com/c-sc/sc?s=$gold:$copper&p=D&yr=0&mn=7&dy=0&i=p99295968853&a=217994610&r=7 736

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  36. MarkWFebruary 19, 2012 at 5:52 PM

    CP- Copper is troublesome, yes indeed. I'm honestly feeling a little bearish here, but respect the strength of the bull here.

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  37. 2nd_aveFebruary 19, 2012 at 5:58 PM

    What's not to like? Copper futes +1.8%, gold futes +0.67%, silver futes +1.21%.

    ReplyDelete
  38. MarkWFebruary 19, 2012 at 6:22 PM

    2nd- It hasn't followed higher. It's last top was 4.60ish, now a buck lower.

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  39. BB CanadaFebruary 19, 2012 at 6:47 PM

    Mark, that $4.60 copper may be like the $145 oil - a high we won't see again for a long time.

    But even the high $3's indicates economic expansion.

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  40. MarkWFebruary 19, 2012 at 6:52 PM

    BB- Yeah, and it's also not choking via cost, I get it. If it runs up to 4.00ish I'd feel better.

    ReplyDelete
  41. ChickenpookieFebruary 19, 2012 at 7:13 PM

    I think Japan should be buying copper and aluminum rather than buying the dollar....

    Maybe they will?

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  42. ChickenpookieFebruary 19, 2012 at 7:18 PM

    Copper - Sheesh, looks like Comex copper inventory has been on the increase while LME inventory continued it's decline:

    http://www.kitcometals.com/charts/copper_historical_large.html

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  43. ChickenpookieFebruary 19, 2012 at 7:25 PM

    The European Central Bank plans to swap its present Greek debt holdings for new bonds once the debt-restructuring deal is complete.

    Euro can kickers on your mark...one...two...three...KICK!

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  44. ChickenpookieFebruary 19, 2012 at 7:34 PM

    "China's central bank said on the weekend it will lower the ratio of funds that banks must hold as reserves to 20.5 percent from 21 percent effective Friday. That will free up tens of billions of dollars for lending.

    The cut frees money for lending at a time when the growth rate is expected to drop from last quarter's 8.9 percent to closer to 8 percent. "

    ReplyDelete
  45. ChickenpookieFebruary 19, 2012 at 8:20 PM

    Greece - Needs to work harder to meet their 2020 fiscal budget?

    LOL, what about their 2012 budget, first they need to get that one under control....?!?!?

    ReplyDelete
  46. port2013February 19, 2012 at 9:06 PM

    Cp, that's funny, "what about their 2012 budget"

    I get it now. Greece paying back the loans really doesn't matter. I'm guessing Greece gets it too and they know there are several other big players trying to figure out what they can get away with.

    Regarding CP's "China's central bank" comment above at 7:34 PM, FT reported last week that China told it's banks to roll over loans for the local governments. If I were to look at this as a data point I'd say it's a bad thing but what do I know. The article quotes someone stating that the loans will generate a return and I assume they mean a return big enough to pay off the principal.

    2/12/2012 China tells banks to roll over loans
    http://www.ft.com/intl/cms/s/0/dc7035dc-553b-11e1-b66d-00144feabdc0.html#axzz1mtZFN2Gw

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  47. ChickenpookieFebruary 19, 2012 at 9:27 PM

    China - Yeah, I'm not so sure about relaxing reserve requirements by a tiny fraction, could be used as an excuse to try to pump the enthusiastic rally, you know, grasping at straws.

    Why shouldn't China roll those loans over though, they've got some pretty aggressive growth goals planned for the next decade and it's only paper money being traded for tangible commodities. Maintaining escape velocity sounds like a good deal for Chinese consumers, to me.

    So why not unload the paper onto commodities producers who will actually put it to work??

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  48. Telestar3dFebruary 19, 2012 at 11:07 PM

    This comment has been removed by the author.

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  49. Telestar3dFebruary 19, 2012 at 11:12 PM

    Paris

    http://www.youtube.com/watch?v=oHlhOgQ36m8&ob=av2e

    ReplyDelete
  50. DavidFebruary 20, 2012 at 12:51 AM

    Copper topped on Feb 9 because $USD bottomed on Feb 9. Copper is priced in $USD, so this is no wonder. However, tonight the pattern of higher lows in $USD since Feb 9 clearly broke down, so I would expect all commodities to perform very well over the next few weeks. Maybe time to buy FCX? How about placing a buy stop at $44.50, just above Thursday's high? I would do it if I had the funds to spare. As it is now, I might buy some calls on FCX if it rises above $44.50.

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  51. AnonymousFebruary 20, 2012 at 1:08 AM

    http://www.ft.com/intl/cms/s/0/d94e01d6-53c9-11e1-9eac-00144feabdc0.html#axzz1muXa5Qfg

    "For now, optimism prevails. But bullish investors might wish to ponder a statistic from Jim Reid of Deutsche Bank.

    He looked into how often the S&P 500 has remained above its opening January level for the entire year. He found only eight instances since 1928; the last was in 1979."

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  52. ChickenpookieFebruary 20, 2012 at 5:05 AM

    IRE - "Bank of Ireland returns to net profit, deposits up: AP"

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  53. BB CanadaFebruary 20, 2012 at 5:50 AM

    CP watch the scales on the LME vs. the CME.

    LME is done 40 tonnes the last 30 days where CME is only up 4 tonnes.

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  54. BB CanadaFebruary 20, 2012 at 6:08 AM

    Re Copper, sold one of my last copper stocks Friday. Not sure what will happen with the miners, but there are many stocks which don't need the price of a commodity to go up to do well. Still have a large position in my mining drilling company as there are a lot of projects planned for the next few years and these guys will get great margins.

    The only miner I'm keeping now is HBM as they are conservative, have huge cash on their balance sheet and a bunch of good projects coming up. It's a long term play for me.

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  55. ChickenpookieFebruary 20, 2012 at 6:25 AM

    Copper - Looks like this metal's down over 2% this morning...

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  56. ChickenpookieFebruary 20, 2012 at 6:28 AM

    BB - Yes, I see that now. Hmm, wonder what happens if WTIC goes on a tear from here.... Seems like it wants to.

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  57. AnonymousFebruary 20, 2012 at 6:39 AM

    http://216.105.249.165/Mobile/news?id=437717047

    IRE article

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  58. BB CanadaFebruary 20, 2012 at 6:53 AM

    I think we see a reduction in the difference between WTIC and Brent this year. The oil producers are figuring out ways to get the oil out of the continent to get Brent pricing.

    Probably this means WTIC up, Brent down (but less).

    Should be a good year for the North American energy stocks.

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  59. JesseFebruary 20, 2012 at 9:52 AM

    Excellent investment Mark! Sounds like a great ride. You just inspired me to head out for a 3 hour walk.

    Outside of the bull/bear dialogue, we should keep an eye on by far (imo) the best chart in the market.

    Breakaway gap and pulling back over 2% over the weekend.

    http://chart.ly/b2qqwn7

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  60. ChickenpookieFebruary 20, 2012 at 10:37 AM

    "The oil producers are figuring out ways to get the oil out of the continent to get Brent pricing."

    Yep, and debt-ridden government is probably licking their chops at the thought of taxing the windfall.

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  61. AnonymousFebruary 20, 2012 at 10:51 AM

    hitting the links. if you're in san diego, stay off the 15 around poway. i might slice into it.

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  62. DavidFebruary 20, 2012 at 1:52 PM

    Jesse, the breakout in UNG can be just noise or a bull trap generated by black box algos. The best charts out there are those where a series of higher lows and higher highs have been made after a looong decline (i.e., where a new uptrend is just starting after a long downtrend). MGIC is an example of a great chart. IRE is another one (it will be even better once it closes above $8).

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  63. DavidFebruary 20, 2012 at 2:35 PM

    Several people on this blog suggested that a growing US debt/GDP ratio does not have to drive up gold price since we have already seen this ratio grow between 1980 and 1995 from 35% to 65%.

    However, 65% was still a pretty low level. In fact, hyperinflation episodes so far started only when the ratio of debt/GDP exceeded 90% (it is more than 100% for US now) since that required the central bank to monetize the debt (which the Fed is already doing). Here is what John Mauldin wrote about this issue over the weekend:

    "Kennedy, Reagan, and Bush cut taxes, and the economy grew and more taxes were collected in total within a few years. But we are no longer able to cut marginal income tax rates and borrow to pay the deficit, waiting for growth to happen to make the cuts "pay for themselves." We have simply borrowed too much. We are close to the limit. We must find other options.

    The growing debt and the deficit is a deadly cancer on the economy. It will deliver a mortal blow to the economy if not dealt with. It will soon overwhelm our national economic body."

    So, folks, don't compare our present situation with the distant past. This time IS different. Even if the economic growth in the US might be improving now, the growth rate is still MUCH smaller than the growth rate in the national debt. And there is nothing that can be done to stop the growth of debt in the next few years, and thus nothing can stop the growth of gold in the next few years.

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  64. DavidFebruary 20, 2012 at 2:47 PM

    Hussman chimes in:

    "Overvalued conditions alone can go on for several years; overvalued and overbought conditions together can continue for quarters; overvalued, overbought, overbullish, rising-yield conditions can continue for months; exhaustion syndromes can also extend for a few months, even though they typically resolve with deep declines over a longer horizon of about 6 months. During those intervening periods, as is clear on the chart above, the market can gain further ground. It's just that this ground is rarely durable, and the surrender of that ground tends to be both steep and abrupt.

    Speculators who feel confident in their ability to time an exit are welcome to speculate. ...

    [That's me, folks! :) I am hoping that the current rally will last for at least another month until the first real correction and I'll be able to sell many of my speculative positions and reduce significantly my margin debt before that correction comes...]

    As of last week, the Market Climate for stocks remained unfavorable, reflecting overvalued, overbought, overbullish conditions, rising yield pressures, an exhaustion syndrome, and reduced but continuing economic concerns. Strategic Growth and Strategic International remain well-hedged here. ...

    If history is any guide, then one thing is certain - more durable investment opportunities will come. When they do, their arrival is typically announced by the abrupt destruction of preceding speculative gains."

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  65. DavidFebruary 20, 2012 at 3:25 PM

    The S&P futures puked when trading opened in Australia -- I wonder what happened...

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  66. BB CanadaFebruary 20, 2012 at 4:14 PM

    David,

    Debt / GDP went to 120% at the end of WW2 and the US was able to work through this without hyperinflation. Hard decisions needed to be made and they were. The U.S. is getting to the point again where hard decisions need to be made to get things back on track and they will be made.

    I read recently that if the U.S. just raised their taxes to Canada's level, the deficit would be gone.

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  67. 2nd_aveFebruary 20, 2012 at 5:19 PM

    SPX futes just puked? I don't see it, David.

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    Replies
    1. DavidFebruary 20, 2012 at 5:31 PM

      When I was writing that, the futures collapsed from 1368 to 1362, and I wasn't sure that the decline would stop there. But it did, and the futures rebounded since then, making a double bottom at 1362.

      Delete
  68. 2nd_aveFebruary 20, 2012 at 5:47 PM

    new post

    ReplyDelete